Impact of the One Big Beautiful Bill on Medicare & Medicaid

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 On July 4, 2025, President Trump signed into law H.R. 1 – the One Big Beautiful Bill Act  (OBBB).  This sweeping legislation narrowly passed Congress through a special budget  process (“reconciliation”), which allowed it to pass the Senate with a simple majority vote  rather than the usual 60 votes needed to overcome a filibuster. The law extends tax cuts that  were first enacted in 2017 and funds other administration priorities. To help pay for these  policies, it makes unprecedented cuts to critical safety-net programs that provide health care  and other assistance.  

Massive Health Care Cuts  

The OBBB cuts over $1 trillion from health programs – the largest rollback of federal support  for health care in American history. These cuts will result in an estimated 10 million people  losing their health insurance coverage.  [1] The legislation also slashes at least $120 billion  from SNAP (the Supplemental Nutrition Assistance Program, formerly known as food  stamps), reducing food assistance for low-income families.  

Even with these significant cuts, the Act is still projected to add at least $3.4 trillion to the  national debt.  [2] It also speeds up the timeline for when Medicare’s trust fund (which pays for  hospital care) will become insolvent. If Congress takes no additional action, automatic  spending cuts will be triggered, reducing Medicare funding by approximately $500 billion  between 2026 and 2034.  [3]  

The health care cuts will be implemented over several years and primarily target Medicaid  the joint federal-state program that provides health coverage to low-income individuals and  families. The cuts are enacted through several mechanisms that will reduce the number of  people enrolled in Medicaid:  

Work requirements:  Certain adults will need to meet new “community engagement”  mandates (essentially work or training requirements) to keep their Medicaid coverage.  These requirements have been shown to increase administrative costs and burdens for  states and individuals while reducing access to health care and failing to increase  employment. 

More frequent eligibility checks: States will need to verify people’s eligibility for  Medicaid more often, which historically leads to coverage losses even among those  who remain eligible. 

Immigration restrictions: Certain groups of lawfully present immigrants will lose  Medicaid eligibility.  

Reduced state funding options: The law restricts the use of “provider taxes” by states  to generate additional money for their Medicaid programs.  There will also be significant changes in the Affordable Care Act (ACA) marketplace.  Financial assistance that helps people afford ACA insurance will be allowed to expire at the  end of 2025. It is estimated that this change alone will cause an additional 5 million  individuals to lose insurance,  [4] further exacerbating coverage losses across the health care  system.  

Changes Affecting Medicare Beneficiaries:  While these broad health care cuts will affect many Medicare beneficiaries indirectly,  including those who are dually eligible for both Medicare and Medicaid, several provisions of  the OBBB directly target Medicare beneficiaries:  

New Restrictions on Lawfully Present Immigrants: Before the OBBB, lawfully present non-citizens could  qualify for Medicare by meeting work  history requirements, or if they lacked the required work credits, by meeting length of  residency requirements. Qualified non-citizens who worked and contributed payroll taxes for  the required number of years were eligible for Medicare coverage on the same basis as U.S.  citizens. 

Now, starting immediately, only the following groups can newly enroll in Medicare:  

• U.S. citizens,  

• Lawful permanent residents (green card holders), 

• Cuban and Haitian Entrants, and,  

• Individuals from certain Pacific Island nations with special agreements with the U.S.  

This  eliminates Medicare eligibility for all other lawfully present immigrants, regardless of  how long they have worked and paid into the system, including:  

• Refugees and people granted asylum,  

• People with Temporary Protected Status,  

• Survivors of human trafficking,  

• Survivors of domestic violence, and,  

• Individuals granted humanitarian parole. 

By July 2026 the Social Security Administration must identify current Medicare beneficiaries  who do not meet the above immigration criteria and notify them that their coverage will end in  January 2027. This represents a major policy shift. While undocumented immigrants have  never been eligible for Medicare, lawfully present individuals who worked and paid into the  system have historically been able to qualify for Medicare benefits.  

Blocking Improvements to Medicare Savings Programs:  The law imposes a nine-year ban on implementing improvements to Medicare Savings  Programs (MSPs), which help lower-income Medicare beneficiaries pay for premiums and  out-of-pocket costs.  [5] The Congressional Budget Office estimates this will save over $66  billion over 10 years.  [6] But these “savings” come from preventing eligible beneficiaries from  accessing programs designed to make Medicare more affordable.  

Blocking Nursing Home Staffing Standards:  The legislation blocks the implementation of national minimum staffing requirements for  nursing homes that were designed to improve quality of care. Interestingly, while federal  courts have already struck down portions of these standards, the Trump Administration  continues to defend the staffing rule in court as of July 2025.  

Limiting Medicare’s Ability to Negotiate Drug Prices: The 2022 Inflation Reduction Act gave Medicare the power to negotiate prices for certain  high-cost medications, with the first negotiated prices taking effect in 2026. The OBBB  carves out “orphan drugs” (medications for rare diseases) from this negotiation process,  limiting Medicare’s ability to control costs for some of the most expensive medications.  

Conclusion  

The OBBB represents a fundamental shift in federal health care policy, with implications  extending far beyond immediate budgetary concerns. The legislation’s impact on Medicare  beneficiaries reflects broader questions about health care access, equity, and the  government’s role in ensuring coverage for vulnerable populations. As implementation  proceeds, the full scope of these changes will become increasingly apparent across the  American health care system.

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Source: Center for Medicare Advocacy, www.medicareadvocacy.org/impact-of-the-big-bill-on-medicare

July 24, 2025 – D. Lipschutz & A. Bers  

[1] Congressional Budget Office (CBO), “Estimated Budgetary Effects of Public Law 119-21,  to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, Relative to the Budget  Enforcement Baseline for Consideration in the Senate” (July 21, 2025), available at:  https://www.cbo.gov/publication/61569.  [2] CBO, “Information Concerning the Budgetary Effects of H.R. 1, as Passed by the Senate  on July 1, 2025” (July 1, 2025), available at  https://www.cbo.gov/publication/61537; also see  Politico, “GOP megabill’s final score: $3.4T in red ink and 10 million kicked off health  insurance, CBO says” (July 21, 2025), available at:  https://www.politico.com/news/2025/07/21/gop-megabills-final-score-3-4t-in-red-ink-and-10 million-kicked-off-health-insurance-cbo-says-00465546.  [3] KFF, “Health Provisions in the 2025 Federal Budget Reconciliation Bill” (July 8, 2025),  available at:  https://www.kff.org/tracking-the-medicare-provisions-in-the-2025-budget-bill/.  [4] CBO, Letter to Ranking Member Wyden, Ranking Member Pallone and Ranking Member  Neal titled “Re: Estimated Effects on the Number of Uninsured People in 2034 Resulting  From Policies Incorporated Within CBO’s Baseline Projections and H.R. 1, the One Big  Beautiful Bill Act” (June 4, 2025), available at:  https://link.edgepilot.com/s/ee6646c8/XPfd54N6vkGPQ2s9WhXpYg?  u=https://urldefense.com/v3/__https:/www.cbo.gov/system/files/2025-06/Wyden-Pallone Neal_Letter_6-4-25.pdf__%3B!!Bg5easoyC-OII2vlEqY8mTBrtW N4OJKAQ!IJ_t_o6SqNNHAGA7fJX0WDGk_HfwS17IQbrLNHSWxhWQLKTrV7BJ92WE6rP3  fV4ZT4rd4bqgrrwYuE7ZedeE99_Nc2LFofg9m1-L94g%24.  [5] See, e.g., KFF “What Does the Medicaid Eligibility Rule Mean for Low-Income Medicare  Beneficiaries and the Medicare Savings Programs (MSPs)?” (Nov 2023), available at:  https://www.kff.org/medicaid/issue-brief/what-does-the-medicaid-eligibility-rule-mean-for-low income-medicare-beneficiaries-and-the-medicare-savings-programs-msps/.   [6] CBO, “Estimated Budgetary Effects of Public Law 119-21, to Provide for Reconciliation  Pursuant to Title II of H. Con. Res. 14, Relative to the Budget Enforcement Baseline for  Consideration in the Senate” (July 21, 2025), available at:  https://www.cbo.gov/publication/61569.  4/